<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-28272
AVIGEN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 13-3647113
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1201 HARBOR BAY PARKWAY
SUITE 1000
ALAMEDA, CALIFORNIA 94502
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
</TABLE>
(510) 748-7150
(Registrant's telephone number, including area code)
------------------------
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days
Yes X No
-------- --------
As of February 6, 1996, 7,286,535 shares of the registrant's Common Stock,
$.001 par value, were issued and outstanding.
================================================================================
<PAGE> 2
AVIGEN, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)....................................
Condensed Balance Sheets
June 30, 1996 and December 31, 1996.........................................
Condensed Statements of Operations
Three and six months ended December 31, 1995 and 1996 and for the period
from October 22, 1992 (inception) to December 31, 1996......................
Condensed Statements of Cash Flows
Six months ended December 31, 1995 and 1996 and for the period from October
22, 1992 (inception) to December 31, 1996...................................
Notes to Condensed Financial Statements.......................................
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................................
Item 2. Changes in Securities.........................................................
Item 3. Defaults upon Senior Securities...............................................
Item 4. Submission of Matters to a Vote of Security Holders...........................
Item 5. Other Information.............................................................
Item 6. Exhibits and Reports on Form 8-K..............................................
Signatures..............................................................................
</TABLE>
2
<PAGE> 3
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30, DECEMBER 31,
1996 1996
------------ ------------
(NOTE) (UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents..................................... $ 8,091,645 2,149,837
Investment in marketable securities........................... 8,351,349 13,268,330
------------ ------------
Total current assets.................................. 16,442,994 15,418,167
Property and equipment, net..................................... 1,053,438 1,613,832
Deposits and other assets....................................... 35,525 29,330
------------ ------------
Total assets.......................................... $ 17,531,957 $ 17,061,329
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................. $ 701,885 $ 566,446
Accrued compensation and related expenses..................... 87,994 100,709
Other accrued liabilities..................................... 258,265 192,539
Capital lease obligations -- current portion.................. 31,061 49,712
------------ ------------
Total current liabilities............................. 1,079,205 909,408
Accrued rent.................................................. 249,263 243,347
Capital lease obligations (less current portion).............. 176,266 136,507
Stockholders' equity:
Preferred stock, $.001 par value, 5,00,000 shares authorized,
none shares issued and outstanding......................... -- --
Common Stock, $.001 par value, 30,000,000 shares authorized,
7,035,193 shares issued and outstanding at June 30, 1996,
7,286,535 shares issued and outstanding at December 31,
1996....................................................... 7,035 7,286
Additional paid-in capital.................................... 28,852,767 30,703,111
Deferred compensation......................................... (127,453) (107,151)
Deficit accumulated during the development stage.............. (12,705,126) (14,831,177)
------------ ------------
Total stockholders' equity............................ 16,027,223 15,772,069
------------ ------------
Total liabilities and stockholders' equity............ $ 17,531,957 $ 17,061,329
============ ============
</TABLE>
Note: The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed financial statements.
See accompanying notes.
3
<PAGE> 4
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31, PERIOD FROM OCTOBER 22,
------------------------ ------------------------- 1992 (INCEPTION) THROUGH
1995 1996 1995 1996 DECEMBER 31, 1996
---------- ----------- ----------- ----------- ------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Grant revenue............ $ 29,135 -- $ 72,834 -- $ 265,206
Expenses:
Research and
development......... 549,481 922,810 1,130,734 1,554,394 9,884,493
General and
administrative...... 259,073 551,698 540,063 897,332 5,154,462
---------- ----------- ----------- ----------- ------------
Total expenses......... 808,554 1,474,508 1,670,797 2,451,726 15,038,955
---------- ----------- ----------- ----------- ------------
Loss from operations..... (779,419) (1,474,508) 1,597,983) (2,451,726) (14,773,749)
Interest expense......... (11,731) (6,203) (18,869) (40,236) (700,377)
Interest income.......... 920 227,274 2,842 366,722 455,960
Other income............. -- (800) (800) 188,989
---------- ----------- ----------- ----------- ------------
Net loss................. $ (790,230) $(1,254,237) $(1,613,980) $(2,126,051) $(14,831,177)
========== =========== =========== =========== ============
Net let loss per share... $ (0.17) $ (0.29)
=========== ===========
Shares used in
calculation of net loss
per share.............. 7,285,640 7,285,417
=========== ===========
Pro forma net loss per
share.................. $ (0.15) $ (0.30)
========== ===========
Shares used in
calculation of pro
forma net loss per
share.................. 5,403,652 5,409,808
========== ===========
</TABLE>
4
<PAGE> 5
AVIGEN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD FROM OCTOBER 22,
--------------------------- 1992 (INCEPTION)
DEC. 31 DEC. 31 THROUGH
1995 1996 DECEMBER 31, 1996
----------- ----------- -----------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss..................................... $(1,613,990) $(2,126,051) $(14,831,177)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.............. 207,886 251,456 1,368,007
Amortization of deferred compensation...... -- 20,302 55,453
Write-off of organization costs............ -- -- 145,741
Noncash interest expense................... -- -- 509,652
Common stock issued for service............ -- -- 11,250
Changes in operating assets and
liabilities.............................
Prepaids, deposits and other assets..... 8,757 6,195 (29,330)
Accounts payable, accrued liabilities
and accrued compensation and related
expenses.............................. (44,760) (188,450) 1,157,140
Accrued rent............................ 29,023 (5,916) 243,347
----------- ----------- ------------
Net cash used in operating activities........ (1,413,084) (2,042,464 (11,369,917)
INVESTING ACTIVITIES
Purchases of property and equipment.......... (11,408) (811,850) (2,729,731)
Disposal of property and equipment........... 47,033 -- 47,033
Organization costs........................... -- -- (218,601)
Purchase of marketable securities............ -- (12,712,478) (21,063,827)
Sale of marketable securities................ -- 7,795,497 7,795,497
----------- ----------- ------------
Net cash provided by (used in) investing
activities................................. 35,625 (5,728,831) (16,169,629)
FINANCING ACTIVITIES
Proceeds from notes payable.................. 200,000 -- 2,132,800
Repayment of notes payable................... (200,000) -- (1,709,800)
Proceeds from 1996 bridge financing.......... -- -- 1,937,500
Payment of bridge financing costs............ -- -- (193,750)
Repayment of 1996 bridge financing........... (1,937,500)
Payments on capital lease obligations........ (5,281) (21,108) (40,062)
Proceeds from issuance of preferred stock,
net of issuance costs...................... 1,253,282 -- 9,884,477
Proceeds from issuance of common stock, net
of issuance costs and repurchases.......... (81) 1,850,595 19,615,718
----------- ----------- ------------
Net cash provided by financing activities.... 1,247,920 1,829,487 29,689,383
Net (decrease) increase in cash and cash
equivalents................................ (129,539) (5,941,808) 2,149,837
Cash and cash equivalents, beginning of
period..................................... 203,400 8,091,645 --
----------- ----------- ------------
Cash and cash equivalents, end of period..... $ 73,861 $ 2,149,837 $ 2,149,837
=========== =========== ============
</TABLE>
5
<PAGE> 6
AVIGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying financial
statements include all adjustments, consisting only of normal recurring
adjustments and accruals, that Avigen, Inc. (the "Company") considers necessary
for a fair presentation of its financial position as of December 31, 1996 and
its results of operations and cash flows for the three and six months ended
December 31, 1995 and 1996. These unaudited interim financial statements should
be read in conjunction with the audited financial statements of the Company and
the notes thereto included in the Company's annual report on Form 10-K for the
fiscal year ended June 30, 1996, filed with the Securities and Exchange
Commission.
Operating results for the three and six month periods ended December 31,
1995 and 1996, are not necessarily indicative of the results to be achieved for
the full fiscal year ending June 20, 1997.
2. GRANT REVENUE
Revenue consists of revenue from grants which are recognized in accordance
with the terms of the related agreements.
3. NET LOSS PER SHARE
Except as noted below, net loss per share is computed using the weighted
average number of common shares outstanding. Common equivalent shares are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletins, common and common equivalent shares (stock options, warrants and
preferred stock) issued during the period commencing 12 months prior to the
initial filing of the Company's initial public offering at prices below the
public offering price have been included in the calculation as if they were
outstanding for all periods prior to March 31, 1996 (using the treasury stock
method for stock options and warrants and the if-converted method for preferred
stock). Net loss per share calculated on this basis was ($0.22) for three months
ended December 3, 1995 and ($0.45) for the six months ended December 31, 1995.
Pro forma net loss per share, as presented in the accompanying statement of
operations, has been computed as described above and also gives effect, pursuant
to policy of the Securities and Exchange Commission, to common equivalent shares
from convertible preferred stock issued more than twelve months from the
proposed initial public offering that automatically converted upon completion of
the Company's initial public offering (using the if-converted method) from the
original date of issuance.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis contained in the Company's Annual Report on Form 10-K
for the year ended June 30, 1996, filed with the Securities and Exchange
Commission.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
herein and under the caption "Risk Factors" in the Company's Annual Report on
Form 10-K.
OVERVIEW
Avigen is a leader in the development of gene therapy products derived from
adeno-associated virus ("AAV") for the treatment of inherited and acquired
diseases. The Company's proposed gene therapy products are designed for in vivo
administration to achieve the production of therapeutic proteins within the
body. The Company is developing two broad-based proprietary gene delivery
technologies: AAV vectors and the Targeted Vector Integration ("TVI") system.
The Company believes AAV vectors can be used to deliver genes for the treatment
of brain, liver and prostate cancer, anemia, hemophilia, hyperlipidemia and
metabolic storage diseases. The Company also believes its TVI system will allow
it to pursue more effective treatments for blood cell-related diseases,
including sickle cell anemia, beta-thalassemia and human immunodeficiency virus
("HIV") infection.
Since its inception, the Company has devoted substantially all of its
resources to research and development activities. The Company is a development
stage company and has not received any revenue from the sale of products. The
Company does not anticipate generating revenue from the sale of products in the
foreseeable future. The Company expects its source of revenue, if any, for the
next several years to consist of government grants and payments under
collaborative arrangements. The Company has incurred losses since its inception
and expects to incur substantial losses over the next several years due to
ongoing and planned research and development efforts, including preclinical
studies and clinical trials. At December 31, 1996, the Company had an
accumulated deficit of $14.8 million.
RESULTS OF OPERATION
Three months ended December 31, 1995 and 1996
Grant revenue decreased from $29,000 for the three month period ended
December 31, 1995 to zero for the period ended December 31, 1996. Grant revenue
consisted of reimbursements under a NIH grant. Revenues earned under research
grants are determined by the timing of the award from the issuing agency. As a
result, research grant revenue earned in one period is not predictive of
research grant revenue to be earned in future periods.
The Company's research and development expenses increased from $550,000 for
the three month period ended December 31, 1995 to $923,000 for the period ended
December 31, 1996. The increase from 1995 to 1996 was due primarily to the
increased number of personnel.
General and administrative expenses increased from $260,000 for the three
month period ended December 31, 1995 to $552,000 for the period ended December
31, 1996. The increase from 1995 to 1996 was primarily due to increased
personnel.
Net interest income and expense increased from ($11,000) for the three
month period ended December 31, 1995 to $221,000 for the period ended December
31, 1996. The increase was due primarily to the investment by the Company of
the proceeds from its initial public offering in May, 1996.
7
<PAGE> 8
Six Months Ended December 31, 1995 and 1996
Grant revenue decreased from $73,000 for the six month period ended
December 31, 1995 to zero for the period ended December 31, 1996. Grant revenue
consisted of reimbursements under a corresponding NIH grant.
The Company's research and development expenses increased from $1.1
million for the six month period ended December 31, 1995 to $1.6 million for
the corresponding period ended December 31, 1996. The increase from 1995 to
1996 was due primarily to the increased number of personnel and the associated
expenses. The Company expects research and development spending to increase
significantly over the next several years as the Company expands research and
product development efforts.
General and administrative expenses increased from $540,000 for the six
month period ended December 31, 1995 to $897,000 for the period ended December
31, 1996. The increase from 1995 to 1996 was primarily due to an increase in
personnel, and costs relating to the Company's Annual Meeting of Stockholders
and filings with the Securities and Exchange Commission. General and
administrative expenses are expected to increase as the level of the Company's
activities increases but to decrease as a percentage of total expenses, with
the expansion of the research and development efforts.
Net interest income and expense increased from ($16,000) for the six
month period ended December 31, 1995 to $326,000 for the corresponding period
ended December 31, 1996. The increase was due primarily to the investment by
the Company of the proceeds from its initial public offering in May 1996.
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company consummated an initial public offering (the
"Offering") of 2,500,000 shares of Common Stock, with net proceeds to the
Company of $17.7 million, net of expenses. In July 1996, the Company issued
250,000 additional shares of Common Stock in connection with the exercise of
the underwriters' over-allotment option. Net proceeds from such sale were
approximately $1,850,000.
Prior to May 1996, the Company financed its operations primarily through
private placements of Common Stock and Preferred Stock and a bridge financing
which was completed on March 29, 1996, in which the Company issued promissory
notes, which were fully paid with the proceeds from the offering and warrants,
including placement agent warrants, which expire in May 2001. Through March 31,
1996, the Company had raised approximately $11.0 million, net of financing
costs, from the sale of Common Stock and Preferred Stock and $1.9 million from
the 1996 Bridge Financing.
At December 31, 1996, the Company had cash, cash equivalents and
investments in marketable securities of approximately $15.4 million. The Company
expects its cash requirements to increase significantly in future periods. The
Company will require substantial funds to conduct the research and development
activities and preclinical studies and clinical testing of its potential
products and to manufacture and market any products that are developed. The
Company's facility is approximately 23,000 square feet leased through May 2003.
The Company presently anticipates that it will either be able to renew the lease
of this facility or find suitable alternate facilities in the same general area
without a material disruption of its operations. In October 1996, the Company
completed a 7,000 square feet expansion of its research and development
facilities and administration offices. The construction cost of such expansion
was approximately $500,000. To the extent the Company decides to develop its own
manufacturing facilities, it would require substantial additional capital.
The Company's cash requirements may vary materially from those now planned
because of the results of research, development and clinical trials, the time
and costs involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in the
Company's existing research relationships, the ability of the Company to
establish collaborative arrangements, the development of commercialization
activities and arrangements and the purchase or lease of additional capital
equipment.
8
<PAGE> 9
The Company believes that the available cash and cash equivalents and
short-term investments will be sufficient to meet the Company's operating
expenses and capital requirements for at least the next 12 months. At the
conclusion of the 12 month period the Company will be required to seek
additional funds through public or private financings or collaborative
arrangements with corporate partners. Issuances of additional equity securities
could result in substantial dilution to stockholders. There can be no
assurances that additional funding will be available on terms acceptable to the
Company, if at all. The failure to fund its capital requirements would have a
material adverse effect on the Company's business.
9
<PAGE> 10
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of Avigen, Inc. was held on
November 22, 1996.
(b) The matters voted upon at the meeting and the voting of stockholders
with respect thereto are as follows:
The election of John Monahan, Zola Horovitz and Yuichi Iwaki to the Board
of Directors to hold office until the 1999 Annual Meeting of Stockholders
and until his successor is elected and has qualified, or until such
directors' earlier death, resignation or removal. The voting results, with
approximately 62% of the shares voting, was as follows:
Monahan: For: 4,434,381
Against: 50,246
Abstain: -0-
Horovitz: For: 4,434,381
Against: 50,246
Abstain: -0-
Iwaki: For: 4,434,381
Against: 50,246
Abstain: -0-
In addition, Richard Pratt, John Prendergast and Philip Whitcome will
continue to serve on the Board of Directors until the 1997 Annual Meeting
of Stockholders and until his successor is elected and has qualified, or
until such directors' earlier death, resignation or removal. In addition,
Lindsay Rosenwald and Leonard Shaykin will continue to serve on the Board
of Directors until the 1998 Annual Meeting of Stockholders and until his
successor is elected and has qualified, or until such directors' earlier
death, resignation or removal.
The voting results to approve the selection of Ernst & Young LLP as the
Company's Auditors are as follows:
For: 4,481,077
Against: 2,500
Abstain: 1,050
No-Vote: -0-
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
11.1 Statement re: Computation of Net Loss Per Share
27.1 Financial Data Schedule
</TABLE>
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIGEN, INC.
(Registrant)
Date: /s/ JOHN MONAHAN
--------------------------------------
John Monahan
Chief Executive Officer and President
Date: /s/ THOMAS J. PAULSON
--------------------------------------
Thomas J. Paulson
Vice President Finance,
Chief Financial Officer, and Secretary
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
11.1 Statement re: Computation of Net Loss Per Share
27.1 Financial Data Schedule
</TABLE>
12
<PAGE> 1
EXHIBIT 11.1
AVIGEN INC.
(A DEVELOPMENT STAGE COMPANY)
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Loss.................................... $ (790,000) $ (1,254,000) $ (1,614,000) $ (2,126,000)
========== =========== =========== ===========
Weighted average common shares
outstanding............................... 2,014,571 7,285,640 2,020,729 7,285,417
Shares related to Staff Accounting Bulletin
Topic 4D:
Common Stock.............................. 158,641 158,641
Common Stock Options...................... 663,135 663,135
Preferred Stock........................... 502,493 502,493
Common and Preferred Stock Warrants....... 211,552 211,552
---------- ----------- ----------- -----------
Total shares outstanding for
primary and fully diluted net
loss per share.................. 3,550,392 7,285,640 3,556,550 7,285,417
========== =========== =========== ===========
Net loss per share.......................... $(0.22) $(0.17) $(0.45) $(0.29)
========== =========== =========== ===========
Calculation of shares outstanding for
computing pro forma net loss per share:
Shares use in computing net loss per
share.................................. 3,550,392 3,533,974
Adjustment to reflect the effect of the
assumed conversion of convertible
preferred stock from the date of
issuance............................... 1,853,260 1,875,834
---------- -----------
Total shares outstanding for pro
forma net loss per share........ 5,403,652 5,409,808
========== ===========
Pro forma net loss per share................ $(0.15) $(0.30)
========== ===========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,149,837
<SECURITIES> 13,268,330
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,418,167
<PP&E> 2,904,704
<DEPRECIATION> 1,290,872
<TOTAL-ASSETS> 17,061,329
<CURRENT-LIABILITIES> 909,406
<BONDS> 136,507
0
0
<COMMON> 7,286
<OTHER-SE> 15,764,783
<TOTAL-LIABILITY-AND-EQUITY> 17,061,329
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (2,451,726)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (40,236)
<INCOME-PRETAX> (2,125,251)
<INCOME-TAX> (800)
<INCOME-CONTINUING> (2,126,051)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,126,051)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> .00
</TABLE>
